Friday, October 18, 2013

Efficiency keeps you fit; and Effectiveness keeps you at the right direction.

Enterprise Architecture is an approach to ensure enterprise
as a whole is better than the sum of pieces. However, what do we mean the
“BETTERNESS”? Should EA be more about efficiency or effectiveness?

Approach the question
from the perspective of Theory of Constraints, ToC takes seriously of the
notion that a system is more than the sum of its parts, etc. that all elements
of a system constrain one another. Having a quantitative way to look at
efficiency and effectiveness through some kind of framework like ToC really
makes sense. Now in business you have the paradox of Synergy versus
Responsiveness, and speed vs. stabilizability. That implies that EA will follow the decision of the enterprise
strategy more leaning to one or the other.

Efficiency is typically achieved through
standardization. The bad side of standardization is that, by definition, it
eliminates potential for mutation and innovation. Consequently, standardization
can foster brittle systems! When applying ToC theory to the management practices, the
practical result of TOC approach is that either you are optimizing for the
whole or for the parts. Local
efficiencies may not add up to the efficiency of the whole and, in most cases,
undermine the efficiency of the whole. The efficiency of the whole is governed
by the capacity of the constraint or constraints. In effective organizations, there will be very few governing
constraints.

Effectiveness, then,
is a measure of how the system serves the constraints so as to maximize
throughput and minimize expense. Very serious challenges to effectiveness
emerge when having local measures of performance competing with global measures
of performance. In short, the question is much more problematic than it
appears. Specifically, regarding IT systems, the capability of measuring
everything often undermines the effectiveness of the whole organization because
of the many competing performance measures

At some point in the
enterpriseevolution, business
effectiveness and efficiency are also correlated specifically when the
organization reaches its capacity. At this point trying to improve
effectiveness brings down efficiency and vice versa. The corollary is true as
well. Obviously when they are not correlated, the organization has slack.

Generally speaking, you have to have effect first, and then
make the effect more efficient. Accordingly, the next level should be on
effectiveness of improving effectiveness, which could implicitly involve
efficiency of improving effectiveness, and ultimately reach the enterprise
agility.